China National Building (3323.HK) Q1 2024 Earnings Report

CNBM reported Q1 2024 revenue of 37.021 billion CNY, a decline of 16.2% year over year and 26.9% quarter over quarter, with gross profit of 6.02 billion CNY and a gross margin of 16.3%. Despite EBITDA of 4.14 billion CNY and an operating margin of approximately 1.8%, the company posted a net loss of 1.355 billion CNY and an EPS of -0.16. The quarterly results reflect a challenging demand environment in China’s construction materials market, margin pressure, and a heavy reliance on external financing to sustain liquidity. Ongoing deleveraging and EBITDA stabilization appear imperative to restore earnings quality. Free cash flow remained negative at roughly -10.81 billion CNY for the period, driven by negative operating cash flow (-5.99 billion CNY) and sizable capital expenditure (-4.82 billion CNY). Financing activities contributed positively, providing 11.29 billion CNY, and cash at period end stood at 29.50 billion CNY, up modestly from 27.43 billion at the start. The balance sheet remains asset-light in liquidity terms despite a large asset base, with total debt of 161.45 billion CNY and net debt of about 128.65 billion CNY, yielding leverage intensities that warrant close surveillance. The company exhibits weaker near-term profitability versus regional peers, signaling potential downside risk if the operating environment does not improve, but valuation supports potential option value for a turnaround if deleveraging and margin recovery unfold.